Chalk plan offers some homeowners tax relief

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Chalk plan offers some homeowners tax relief

By MICHAEL WELLES SHAPIRO mshapiro@islandpacket.com 843-706-8142
Published Saturday, March 7, 2009 in The Island Packet  |  570 Words  |  news/local

Hilton Head Island resident Leslie Ford was feeling the pinch from the recession last year, so her family decided to rent out their home for the summer to make some extra money.
What Ford didn't realize was that by renting, she lost an important tax advantage.
"The economy's rough, so we moved out for part of the summer last year and rented the house. But it wasn't until November that they hit me with an increased tax bill of $9,000," she said. That brought the total bill to about $13,000.
Ford's taxes went up because people who rent their homes for more than two weeks a year pay property taxes based on an assessment rate of 6 percent -- not the 4 percent rate they'd otherwise get as owner-occupants. Moreover, they must pay taxes for public school operating costs, which owner-occupants don't pay.
When state Rep. Richard Chalk, R-Hilton Head Island, heard about Ford's predicament, he filed a bill to expand the rental time frame from two weeks to 90 days, allowing homeowners who rent to retain owner-occupant status at the lower tax rate.
The bill also would force Beaufort County and the school district to refund money previously paid by those owners going back to 2005.
Chalk said the legislation is a matter of fairness for residents who want to rent their homes for a few summer months.
Some school board members and county officials oppose the bill, and the refund provision in particular, saying that the loss of tax revenue could be a significant blow to their finances.
"I think Mr. Chalk's intention was to bring what he saw as fairness to owner-occupied homes," said Hilton Head school board member Bob Arundell. "But if I choose to use my property in a commercial manner, is it really unfair for me to pay taxes at a commercial tax rate?"
Arundell said he thinks the bill also would create a loophole for part-time residents who might already be renting out their properties during the summer. He said it would make it easier for them to qualify for primary residency status and start paying less.
"My main concern is there are a lot of people who will drive their truck through the door, so to speak, once it's open," Arundell said.
Chalk said he doesn't expect the bill to have much of an impact on local government finances He said the county council and the school board can raise taxes marginally on other property owners to make up for any lost revenue.
"It may be a minor shift where other property (owners) have to bear a little bit more burden, but the bottom line for the school system ought not be impacted," he said.
Arundell is not convinced the effect would be so minor.
"The bill may have a greater impact on school district finances than Mr. Chalk intended," he said.
County administrator Gary Kubic said the county assessor's office is studying the legislation to gauge its potential impact.
"We don't think it's a good thing in terms of revenue for us, so I've asked for an estimate of what it actually means for us," Kubic said.
Chalk said he has spoken at length with school district officials and is waiting to get a better sense of the true impact "before we push it all the way through."